EX-99.1 2 a8kerexhibit991q4-17.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

 aaglogoa03.jpg 
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Corporate Communications
 
817-967-1577
 
 
mediarelations@aa.com
FOR RELEASE: Thursday, January 25, 2018
AMERICAN AIRLINES GROUP REPORTS
FOURTH-QUARTER AND FULL YEAR 2017 PROFIT
FORT WORTH, Texas – American Airlines Group Inc. (NASDAQ: AAL) today reported its fourth-quarter and full year 2017 results, including these highlights:
•
Reported a full year 2017 pre-tax profit of $3.1 billion, or $3.8 billion excluding net special items1, and a full year net profit of $1.9 billion, or $2.4 billion excluding net special items
•
Reported a fourth-quarter 2017 pre-tax profit of $425 million, or $739 million excluding net special items, and a fourth-quarter net profit of $258 million, or $455 million excluding net special items
•
2017 earnings were $3.90 per diluted share, or $4.88 per diluted share excluding net special items. Fourth-quarter earnings were $0.54 per diluted share, or $0.95 per diluted share excluding net special items
•
Accrued $241 million for the company's profit sharing program in 2017, including $46 million in the fourth quarter
•
Returned $1.7 billion to shareholders in 2017, including the repurchase of 33.9 million shares and dividend payments of $198 million

Pre-tax earnings excluding net special items for the fourth quarter of 2017 were $739 million, a $34 million decrease from the fourth quarter of 2016. For the full year 2017, pre-tax earnings excluding net special items were $3.8 billion, a decrease of $1.2 billion from 2016.

“2017 was a remarkable year for American Airlines. We made enormous progress as a company as we continued to make significant investments in our team members, product and operation, and those investments are beginning to pay off,” said Chairman and CEO Doug Parker. “Our operation continues to deliver record-setting performance for the company, and the credit goes to our team members who are simply the best in the business.

“We enter 2018 with strong momentum. Demand for American’s reliable, friendly service remains strong, our network is expanding, and the products we are bringing to market are resonating with customers.”


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 2


Fourth-Quarter and Full Year 2017 Revenue and Expenses
 
GAAP
 
Non-GAAP1
 
GAAP
 
Non-GAAP1
 
4Q17
 
4Q16
 
4Q17
 
4Q16
 
FY17
 
FY16
 
FY17
 
FY16
Total operating revenues ($ mil)
$
10,600

 
$
9,789

 
$
10,600

 
$
9,789

 
$
42,207

 
$
40,180

 
$
42,207

 
$
40,180

Total operating expenses ($ mil)
9,910

 
9,022

 
9,607

 
8,761

 
38,149

 
34,896

 
37,415

 
34,173

Operating income ($ mil)
690

 
767

 
993

 
1,028

 
4,058

 
5,284

 
4,792

 
6,007

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax income ($ mil)
425

 
500

 
739

 
773

 
3,084

 
4,299

 
3,840

 
5,071

Pre-tax margin
4.0
%
 
5.1
%
 
7.0
%
 
7.9
%
 
7.3
%
 
10.7
%
 
9.1
%
 
12.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income ($ mil)
258

 
289

 
455

 
475

 
1,919

 
2,676

 
2,399

 
3,173

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per diluted share
$
0.54

 
$
0.56

 
$
0.95

 
$
0.92

 
$
3.90

 
$
4.81

 
$
4.88

 
$
5.71

 
Strong close-in demand and improving yields drove an 8.3 percent year-over-year increase in fourth-quarter total revenue, to $10.6 billion. Passenger yields grew in all geographic regions, including 11.0 percent growth in trans-Atlantic and 7.9 percent growth in Latin America. Cargo revenue was up 19.7 percent to $232 million due to higher volumes and a 6.7 percent increase in cargo yield. Other revenue was up 8.1 percent to $1.3 billion. Fourth-quarter total revenue per available seat mile increased by 5.6 percent compared to 2016 on a 2.5 percent increase in total available seat miles.
Total fourth-quarter operating expenses were $9.9 billion, up 9.8 percent year-over-year due primarily to a 23.5 percent increase in consolidated fuel expense and a 7.0 percent increase in salaries and benefits resulting from the company’s investments in its team members. Total fourth-quarter cost per available seat mile (CASM) was 14.71 cents, up 7.1 percent from fourth-quarter 2016. Excluding fuel and special items, total fourth-quarter CASM was 11.25 cents, up 3.8 percent year-over-year.
Strategic Objectives
The company continues to focus on four long-term strategic objectives: Create a World-Class Customer Experience, Make Culture a Competitive Advantage, Ensure Long-Term Financial Strength, and Think Forward, Lead Forward.
Create a World-Class Customer Experience
American began 2017 by being named Air Transport World’s Airline of the Year in recognition of its successful integration and significant investment in its product and people. This is a recognition American had not received since 1988. Also in 2017, American:
•
Recorded its best on-time departure and arrival performance since 2003, and its best baggage handling performance since DOT began reporting in 1994
•
Launched new products to meet customer demand, including the expansion of American’s best-in-class lounges by opening Flagship First Dining, a new exclusive experience for customers in First Class on international and A321T transcontinental flights. American now offers Flagship First Dining in Miami, Los Angeles, and New York-JFK. Importantly, American is the only U.S. airline that offers international First Class
•
Operated the youngest fleet among its peers and invested $4.1 billion in new aircraft, including its first Boeing 737 MAX. By the end of 2018, the company expects to induct a total of 20 new MAX aircraft, which will replace older, less fuel efficient aircraft
•
Introduced new streaming-capable satellite-based internet access on the 737 MAX, which will be rolled out across most of the domestic mainline fleet


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 3


•
Introduced Basic Economy, a product to compete with ultra low-cost carriers. This product is now offered nationwide and to leisure markets in Mexico and most of the Caribbean
•
Rolled out Premium Economy, which offers a wider seat, more legroom, an amenity kit, and enhanced meal choices on international flights. Currently 64 widebody aircraft offer this product. American expects to offer Premium Economy on most of its widebody fleet by the spring of 2019
•
Expanded the airline’s global footprint by launching Los Angeles-to-Beijing service; and announcing service from Philadelphia to Prague, Czech Republic, and Budapest, Hungary; Dallas-Fort Worth to Reykjavik-Keflavik, Iceland; and Chicago-O’Hare to Venice, Italy, which will start this summer
•
Completed delivery of the last Boeing 737-800 and Airbus A321CEO aircraft
•
Painted the last aircraft in American’s new livery
“Customers are responding positively to the options American offers, from international First Class to Basic Economy,” said American Airlines President Robert Isom. “We are far ahead of our U.S. competitors in offering Premium Economy on our international flights, which comes just as we begin to prepare for the busy summer travel season. Importantly, this highly-differentiated product makes American’s international service consistent with its partners across the Atlantic and the Pacific, so customers can book their international Premium Economy trips seamlessly.
“American’s customers are noticing these significant product and network improvements. 2017 survey scores measuring our customers’ likelihood to recommend American were the highest they’ve been in company history,” Isom said.
Make Culture a Competitive Advantage
American is creating an environment that cares for frontline team members, provides competitive pay, and equips its team with the right tools to support its customers. During 2017, American:
•
Awarded each team member with two complimentary round-trip tickets across American’s global network to commemorate being named Air Transport World’s 2017 Airline of the Year
•
After hurricanes hit the Caribbean and Florida, American Airlines team members worked together to help the people of San Juan, Puerto Rico and other affected parts of the region. American and its team members have delivered more than 2.5 million pounds of relief supplies and raised almost $2 million for the American Red Cross, in addition to other relief work
•
Invested more than $300 million in facilities and equipment including renovations to team member spaces, mobile devices for pilots and flight attendants, and the ongoing One Campus One Team initiative at the airline’s global support center in Fort Worth
•
Ensured team member pay remained competitive through initiatives such as a mid-contract salary increase for pilots and flight attendants and continued step increases from a mid-contract pay increase for mechanics and fleet service workers
•
Introduced a best-in-industry maternity and adoption benefit program to all team members including union-represented team members
•
Launched the company's first team member survey in over a decade
•
Provided customer service skills training to 35,000 team members through Elevate the Everyday Experience training, and launched training for leaders that emphasizes supporting team members who directly serve customers
•
Announced that work on its CFM56-5B engines, which power much of American’s Airbus narrowbody fleet, would move in-house to its world-class maintenance team located in Tulsa, Oklahoma beginning later this year


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 4


•
Just this month, shared benefits of the recent Tax Cuts and Jobs Act by issuing $1,000 payments to all non-officer team members at American and its wholly-owned regional carriers. While American does not yet pay federal cash income taxes, the new tax law will reduce the company’s future tax bill and allow more investments in equipment and facilities
Ensure Long-Term Financial Strength
American has taken significant steps forward to ensure its long-term competitiveness in the global aviation industry. In the four full years since the merger closed, the company’s cumulative pre-tax earnings excluding net special items were $19.4 billion. American is focused on capturing the efficiencies created by the merger, delivering on its earnings potential, and creating value for its owners. In 2017, American:
•
Returned $1.7 billion to shareholders through share repurchases and dividends, bringing the total since mid-2014 to $11.4 billion. These repurchases have reduced the share count by 37 percent to 475.5 million shares at the end of 2017. As of December 31, 2017, the company had approximately $450 million remaining of its current $2.0 billion share repurchase authority2 
•
Announced, at American’s Media & Investor Day last fall, $3.9 billion in revenue and cost initiatives expected to be realized by the end of 2021. These projects are on track and are expected to improve the customer experience, drive revenue improvements, and deliver cost efficiencies
•
Completed several innovative and landmark transactions in 2017 that provided efficient financing for the company. These transactions included repricing approximately $5 billion in term loans at industry-leading rates, extending and increasing its revolving credit facility, and setting a new benchmark rate for subordinated aircraft debt in the EETC market
•
On January 25, 2018, declared a dividend of $0.10 per share, to be paid on February 20, 2018, to stockholders of record as of February 6, 2018
Think Forward, Lead Forward
American is committed to re-establishing itself as an industry leader by creating an action-oriented culture that moves quickly to bring products to market, embraces technological change, and quickly seizes upon new opportunities for its network and product. In 2017, American:
•
Announced a $200 million equity stake in China Southern Airlines, leading to a growing codeshare with the largest airline in China
•
Executed an amended and restated trans-Atlantic Joint Business Agreement that extends the term of the agreement with the company’s partners
•
Adopted next-generation technology such as cloud hosting and machine learning to speed time to value
•
Announced a commitment for more than $1.6 billion for improvements of LAX Terminals 4 and 5, setting the stage for American to receive additional gate space, strengthen its Pacific gateway and to be the pre-eminent airline for Los Angeles
•
Built a five-gate expansion at Chicago O’Hare Terminal 3, which is expected to open in April, giving American a new advantage at this key competitive hub
Parker summarized: “As an airline, we will always operate in a just-in-time environment, however, we recognize we must lead for the long term. This means we must be more nimble in our problem solving and in how we innovate and develop the right products, technology, and network both for customers of today and the future. Ultimately, all of this work will produce a company built for the long term, led by a team that thinks long-term, sees the potential of future opportunities, and brings innovative concepts to market quickly and efficiently.”



Guidance and Investor Update
American expects its first-quarter 2018 TRASM to increase approximately 2.0 to 4.0 percent year-over-year, which reflects expected continued improvement in demand for both business and leisure travel. The company also expects its first-quarter 2018 pre-tax margin excluding special items to be between 2.0 and 4.0 percent.3 In addition, based on the guidance issued today and current business conditions, American presently expects its 2018 diluted earnings per share excluding net special items to be between $5.50 and $6.50.3 
For additional financial forecasting detail, please refer to the company’s investor relations update, filed with the Securities and Exchange Commission on Form 8-K. This filing will be available at aa.com/investorrelations.
Conference Call / Webcast Details
The company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CT, which will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available on the website through February 25.
Notes
1.
In the fourth quarter, the company recognized $314 million in net special items before the effect of income taxes. Mainline special items principally consisted of a $123 million charge for the $1,000 cash bonus and associated payroll taxes granted to employees in recognition of recent tax reform, $81 million of merger integration expenses, $58 million of fleet restructuring expenses, and a $20 million net charge resulting from fair value adjustments to bankruptcy obligations. Regional special items of $23 million principally consisted of a charge related to the $1,000 cash bonus and associated payroll taxes discussed above for employees at the company’s regional subsidiaries. The company also recognized a nonoperating special charge of $11 million and an income tax net special benefit of $7 million. See the accompanying notes in the Financial Tables section of this press release for further explanation, including a reconciliation of all GAAP to non-GAAP financial information.
2.
Share repurchases under the buyback program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The program does not obligate the company to repurchase any specific number of shares or continue a dividend for any fixed period, and may be suspended at any time at the company's discretion.
3.
American is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of special items cannot be determined at this time.
About American Airlines Group
American Airlines and American Eagle offer an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. American is a founding member of the oneworld® alliance, whose members serve more than 1,000 destinations with about 14,250 daily flights to over 150 countries. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL. In 2015, its stock joined the S&P 500 index. Connect with American on Twitter @AmericanAir and at Facebook.com/AmericanAirlines.


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 6


Cautionary Statement Regarding Forward-Looking Statements and Information
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 1A. Risk Factors), and other risks and uncertainties listed from time to time in our other filings with the Securities and Exchange Commission. There may be other factors of which we are not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements.




American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 7


American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited) 
 
3 Months Ended
December 31,
 
Percent
Change
 
12 Months Ended
December 31,
 
Percent
Change
 
2017
 
2016
 
 
2017
 
2016
 
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
Mainline passenger
$
7,257

 
$
6,717

 
8.0

 
$
29,238

 
$
27,909

 
4.8

Regional passenger
1,762

 
1,630

 
8.1

 
6,895

 
6,670

 
3.4

Cargo
232

 
194

 
19.7

 
800

 
700

 
14.3

Other
1,349

 
1,248

 
8.1

 
5,274

 
4,901

 
7.6

Total operating revenues
10,600

 
9,789

 
8.3

 
42,207

 
40,180

 
5.0

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Aircraft fuel and related taxes
1,646

 
1,335

 
23.3

 
6,128

 
5,071

 
20.8

Salaries, wages and benefits
2,993

 
2,796

 
7.0

 
11,816

 
10,890

 
8.5

Regional expenses:
 
 
 
 
 
 
 
 
 
 
 
Fuel
383

 
308

 
24.3

 
1,382

 
1,109

 
24.6

Other
1,315

 
1,247

 
5.4

 
5,164

 
4,935

 
4.6

Maintenance, materials and repairs
484

 
482

 
0.5

 
1,959

 
1,834

 
6.8

Other rent and landing fees
443

 
430

 
3.0

 
1,806

 
1,772

 
1.9

Aircraft rent
305

 
295

 
3.4

 
1,197

 
1,203

 
(0.4
)
Selling expenses
383

 
334

 
14.8

 
1,477

 
1,323

 
11.6

Depreciation and amortization
447

 
397

 
12.5

 
1,702

 
1,525

 
11.6

Special items, net
280

 
259

 
8.1

 
712

 
709

 
0.5

Other
1,231

 
1,139

 
8.1

 
4,806

 
4,525

 
6.2

Total operating expenses
9,910

 
9,022

 
9.8

 
38,149

 
34,896

 
9.3

Operating income
690

 
767

 
(10.0
)
 
4,058

 
5,284

 
(23.2
)
Nonoperating income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
24

 
18

 
29.2

 
94

 
63

 
47.8

Interest expense, net
(266
)
 
(254
)
 
5.1

 
(1,053
)
 
(991
)
 
6.2

Other, net
(23
)
 
(31
)
 
(27.5
)
 
(15
)
 
(57
)
 
(73.4
)
Total nonoperating expense, net
(265
)
 
(267
)
 
(0.4
)
 
(974
)
 
(985
)
 
(1.0
)
Income before income taxes
425

 
500

 
(15.1
)
 
3,084

 
4,299

 
(28.3
)
Income tax provision
167

 
211

 
(20.9
)
 
1,165

 
1,623

 
(28.2
)
Net income
$
258

 
$
289

 
(10.9
)
 
$
1,919


$
2,676

 
(28.3
)
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.54

 
$
0.56

 
 
 
$
3.92

 
$
4.85

 
 
Diluted
$
0.54

 
$
0.56

 
 
 
$
3.90

 
$
4.81

 
 
Weighted average shares outstanding
(in thousands):
 
 
 
 
 
 
 
 
 
 
 
Basic
477,165

 
514,571

 
 
 
489,164

 
552,308

 
 
Diluted
479,382

 
518,358

 
 
 
491,692

 
556,099

 
 
Note: Percent change may not recalculate due to rounding.


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 8


American Airlines Group Inc.
Consolidated Operating Statistics
(Unaudited)
 
3 Months Ended
December 31,
 
Change
 
12 Months Ended
December 31,
 
Change
 
2017
 
2016
 
 
2017
 
2016
 
Mainline
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
48,951

 
47,395

 
3.3%
 
201,351

 
199,014

 
1.2%
Available seat miles (ASM) (millions)
59,140

 
57,749

 
2.4%
 
243,806

 
241,734

 
0.9%
Passenger load factor (percent)
82.8

 
82.1

 
0.7pts
 
82.6

 
82.3

 
0.3pts
Yield (cents)
14.82

 
14.17

 
4.6%
 
14.52

 
14.02

 
3.5%
Passenger revenue per ASM (cents)
12.27

 
11.63

 
5.5%
 
11.99

 
11.55

 
3.9%
Passenger enplanements (thousands)
36,035

 
34,700

 
3.8%
 
144,922

 
144,530

 
0.3%
Departures (thousands)
265

 
265

 
—%
 
1,081

 
1,102

 
(1.9)%
Aircraft at end of period
948

 
930

 
1.9%
 
948

 
930

 
1.9%
Block hours (thousands)
833

 
827

 
0.7%
 
3,441

 
3,477

 
(1.0)%
Average stage length (miles)
1,226

 
1,215

 
0.9%
 
1,240

 
1,230

 
0.8%
Fuel consumption (gallons in millions)
866

 
857

 
1.1%
 
3,579

 
3,596

 
(0.5)%
Average aircraft fuel price including related taxes (dollars per gallon)
1.90

 
1.56

 
22.0%
 
1.71

 
1.41

 
21.4%
Full-time equivalent employees at end of period
103,100

 
101,500

 
1.6%
 
103,100

 
101,500

 
1.6%
Operating cost per ASM (cents)
13.89

 
12.93

 
7.4%
 
12.96

 
11.94

 
8.6%
Operating cost per ASM excluding special items (cents)
13.41

 
12.48

 
7.5%
 
12.67

 
11.64

 
8.8%
Operating cost per ASM excluding special items and fuel (cents)
10.63

 
10.17

 
4.5%
 
10.16

 
9.54

 
6.4%
Regional (A)
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
6,376

 
6,057

 
5.3%
 
24,995

 
24,463

 
2.2%
Available seat miles (millions)
8,215

 
7,934

 
3.5%
 
32,687

 
31,676

 
3.2%
Passenger load factor (percent)
77.6

 
76.3

 
1.3pts
 
76.5

 
77.2

 
(0.7)pts
Yield (cents)
27.64

 
26.91

 
2.7%
 
27.58

 
27.26

 
1.2%
Passenger revenue per ASM (cents)
21.45

 
20.54

 
4.4%
 
21.09

 
21.06

 
0.2%
Passenger enplanements (thousands)
13,990

 
13,276

 
5.4%
 
54,718

 
54,184

 
1.0%
Aircraft at end of period
597

 
606

 
(1.5)%
 
597

 
606

 
(1.5)%
Fuel consumption (gallons in millions)
194

 
187

 
4.2%
 
773

 
751

 
2.8%
Average aircraft fuel price including related taxes (dollars per gallon)
1.97

 
1.65

 
19.3%
 
1.79

 
1.48

 
21.2%
Full-time equivalent employees at end of period (B)
23,500

 
20,800

 
13.0%
 
23,500

 
20,800

 
13.0%
Operating cost per ASM (cents)
20.67

 
19.60

 
5.4%
 
20.03

 
19.08

 
5.0%
Operating cost per ASM excluding special items (cents)
20.38

 
19.58

 
4.1%
 
19.96

 
19.04

 
4.9%
Operating cost per ASM excluding special items and fuel (cents)
15.72

 
15.70

 
0.1%
 
15.73

 
15.53

 
1.3%
Total Mainline & Regional
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
55,327

 
53,452

 
3.5%
 
226,346

 
223,477

 
1.3%
Available seat miles (millions)
67,355

 
65,683

 
2.5%
 
276,493

 
273,410

 
1.1%
Cargo ton miles (millions)
752

 
670

 
12.2%
 
2,788

 
2,424

 
15.0%
Passenger load factor (percent)
82.1

 
81.4

 
0.7pts
 
81.9

 
81.7

 
0.2pts
Yield (cents)
16.30

 
15.62

 
4.4%
 
15.96

 
15.47

 
3.2%
Passenger revenue per ASM (cents)
13.39

 
12.71

 
5.4%
 
13.07

 
12.65

 
3.3%
Total revenue per ASM (cents)
15.74

 
14.90

 
5.6%
 
15.27

 
14.70

 
3.9%
Cargo yield per ton mile (cents)
30.91

 
28.97

 
6.7%
 
28.70

 
28.89

 
(0.7)%
Passenger enplanements (thousands)
50,025

 
47,976

 
4.3%
 
199,640

 
198,714

 
0.5%
Aircraft at end of period
1,545

 
1,536

 
0.6%
 
1,545

 
1,536

 
0.6%
Fuel consumption (gallons in millions)
1,060

 
1,044

 
1.7%
 
4,352

 
4,347

 
0.1%
Average aircraft fuel price including related taxes (dollars per gallon)
1.91

 
1.57

 
21.5%
 
1.73

 
1.42

 
21.4%
Full-time equivalent employees at end of period (B)
126,600

 
122,300

 
3.5%
 
126,600

 
122,300

 
3.5%
Operating cost per ASM (cents)
14.71

 
13.74

 
7.1%
 
13.80

 
12.76

 
8.1%
Operating cost per ASM excluding special items (cents)
14.26

 
13.34

 
6.9%
 
13.53

 
12.50

 
8.3%
Operating cost per ASM excluding special items and fuel (cents)
11.25

 
10.84

 
3.8%
 
10.82

 
10.24

 
5.6%
 
(A)
Regional includes wholly owned regional airline subsidiaries and operating results from capacity purchase carriers.
(B)
Regional full-time equivalent employees only include our wholly owned regional airline subsidiaries.
Note: Amounts may not recalculate due to rounding.


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 9


American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
 
3 Months Ended
December 31,
 
 
 
12 Months Ended
December 31,
 
 
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Domestic - Mainline
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
31,525
 
30,574
 
3.1%
 
126,867
 
127,869
 
(0.8)%
Available seat miles (ASM) (millions)
36,529
 
36,361
 
0.5%
 
149,175
 
150,655
 
(1.0)%
Passenger load factor (percent)
86.3
 
84.1
 
2.2pts
 
85.0
 
84.9
 
0.1pts
Yield (cents)
15.49
 
15.03
 
3.1%
 
15.21
 
14.63
 
4.0%
Passenger revenue per ASM (cents)
13.37
 
12.63
 
5.8%
 
12.94
 
12.42
 
4.2%
Domestic Consolidated - Mainline and Total Regional (A)
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
37,901
 
36,631
 
3.5%
 
151,862
 
152,332
 
(0.3)%
Available seat miles (millions)
44,744
 
44,295
 
1.0%
 
181,862
 
182,330
 
(0.3)%
Passenger load factor (percent)
84.7
 
82.7
 
2.0pts
 
83.5
 
83.5
 
—pts
Yield (cents)
17.53
 
16.99
 
3.2%
 
17.25
 
16.66
 
3.5%
Passenger revenue per ASM (cents)
14.85
 
14.05
 
5.7%
 
14.40
 
13.92
 
3.5%
Latin America
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
7,281
 
7,070
 
3.0%
 
29,725
 
29,927
 
(0.7)%
Available seat miles (millions)
9,269
 
8,866
 
4.5%
 
37,702
 
37,760
 
(0.2)%
Passenger load factor (percent)
78.5
 
79.7
 
(1.2)pts
 
78.8
 
79.3
 
(0.5)pts
Yield (cents)
15.68
 
14.52
 
7.9%
 
15.07
 
13.72
 
9.9%
Passenger revenue per ASM (cents)
12.31
 
11.58
 
6.3%
 
11.88
 
10.87
 
9.3%
Atlantic
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
6,262
 
6,087
 
2.9%
 
29,338
 
27,794
 
5.6%
Available seat miles (millions)
8,558
 
8,071
 
6.0%
 
38,112
 
37,174
 
2.5%
Passenger load factor (percent)
73.2
 
75.4
 
(2.2)pts
 
77.0
 
74.8
 
2.2pts
Yield (cents)
13.48
 
12.15
 
11.0%
 
13.39
 
13.60
 
(1.6)%
Passenger revenue per ASM (cents)
9.87
 
9.16
 
7.7%
 
10.31
 
10.17
 
1.4%
Pacific
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
3,883
 
3,664
 
6.0%
 
15,421
 
13,424
 
14.9%
Available seat miles (millions)
4,784
 
4,451
 
7.5%
 
18,817
 
16,145
 
16.5%
Passenger load factor (percent)
81.2
 
82.3
 
(1.1)pts
 
82.0
 
83.1
 
(1.1)pts
Yield (cents)
9.99
 
9.74
 
2.6%
 
9.94
 
9.78
 
1.6%
Passenger revenue per ASM (cents)
8.11
 
8.01
 
1.2%
 
8.14
 
8.13
 
0.2%
Total International
 
 
 
 
 
 
 
 
 
 
 
Revenue passenger miles (millions)
17,426
 
16,821
 
3.6%
 
74,484
 
71,145
 
4.7%
Available seat miles (millions)
22,611
 
21,388
 
5.7%
 
94,631
 
91,079
 
3.9%
Passenger load factor (percent)
77.1
 
78.6
 
(1.5)pts
 
78.7
 
78.1
 
0.6pts
Yield (cents)
13.62
 
12.62
 
7.9%
 
13.35
 
12.93
 
3.2%
Passenger revenue per ASM (cents)
10.50
 
9.93
 
5.7%
 
10.51
 
10.10
 
4.0%
(A) Revenue statistics for all Regional flying are included herein.
Note: Amounts may not recalculate due to rounding.


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 10


Reconciliation of GAAP Financial Information to Non-GAAP Financial Information
American Airlines Group Inc. (the “Company”) sometimes uses financial measures that are derived from the consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The Company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The Company is providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.
The tables below present the reconciliations of the following GAAP measures to their non-GAAP measures: 
•
Pre-Tax Income (GAAP measure) to Pre-Tax Income Excluding Special Items (non-GAAP measure)
•
Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Special Items (non-GAAP measure)
•
Net Income (GAAP measure) to Net Income Excluding Special Items (non-GAAP measure)
•
Basic and Diluted Earnings Per Share (GAAP measure) to Basic and Diluted Earnings Per Share Excluding Special Items (non-GAAP measure)
•
Operating Income (GAAP measure) to Operating Income Excluding Special Items (non-GAAP measure)
Management uses these non-GAAP financial measures to evaluate the Company’s current operating performance and to allow for period-to-period comparisons. As special items may vary from period-to-period in nature and amount, the adjustment to exclude special items allows management an additional tool to better understand the Company’s core operating performance.
Additionally, the tables below present the reconciliations of mainline, regional and total operating costs (GAAP measure) to mainline, regional and total operating costs excluding special items and fuel (non-GAAP measure). Management uses mainline, regional and total operating costs excluding special items and fuel to evaluate the Company’s current operating performance and for period-to-period comparisons. The price of fuel, over which the Company has no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude aircraft fuel and special items allows management an additional tool to better understand and analyze the Company’s non-fuel costs and core operating performance.
Reconciliation of Pre-Tax Income Excluding Special Items for 2014-2017
 
12 Months Ended December 31,
 
 
 
 
 
2014
 
2015
 
2016
 
2017
 
Cumulative
 
 
 
 
(in millions)
 
 
Pre-tax income as reported
 
$
3,212

 
$
4,616

 
$
4,299

 
$
3,084

 
$
15,211

 
 
Pre-tax special items:
 
 
 
 
 
 
 
 
 
 
 
 
Special items, net (1) (4)
 
800

 
1,051

 
709

 
712

 
3,272

 
 
Regional operating special items, net (2) (4)
 
24

 
29

 
14

 
22

 
89

 
 
Nonoperating special items, net (3) (4)
 
132

 
594

 
49

 
22

 
797

 
 
Total pre-tax special items
 
956

 
1,674

 
772

 
756

 
4,158

 
 
Pre-tax income excluding special items
 
$
4,168

 
$
6,290

 
$
5,071

 
$
3,840

 
$
19,369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Pre-Tax Income Excluding Special Items
 
3 Months Ended
December 31,
 
Percent
Change
 
12 Months Ended
December 31,
 
Percent
Change
 
2017
 
2016
 
2017
 
2016
 
 
 
(in millions)
 
 
 
(in millions)
 
 
Pre-tax income as reported
 
$
425

 
$
500

 
 
 
$
3,084

 
$
4,299

 
 
Pre-tax special items:
 
 
 
 
 
 
 
 
 
 
 
 
Special items, net (1)
 
280

 
259

 
 
 
712

 
709

 
 
Regional operating special items, net (2)
 
23

 
2

 
 
 
22

 
14

 
 
Nonoperating special items, net (3)
 
11

 
12

 
 
 
22

 
49

 
 
Total pre-tax special items
 
314

 
273

 
 
 
756

 
772

 
 
Pre-tax income excluding special items
 
$
739

 
$
773

 
-4%
 
$
3,840

 
$
5,071

 
-24%
 
 
 
 
 
 
 
 
 
 
 
 
 
Calculation of Pre-Tax Margin
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax income as reported
 
$
425

 
$
500

 
 
 
$
3,084

 
$
4,299

 
 
Total operating revenues as reported
 
$
10,600

 
$
9,789

 
 
 
$
42,207

 
$
40,180

 
 
Pre-tax margin
 
4.0
%
 
5.1
%
 
 
 
7.3
%
 
10.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calculation of Pre-Tax Margin Excluding Special Items
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax income excluding special items
 
$
739

 
$
773

 
 
 
$
3,840

 
$
5,071

 
 
Total operating revenues as reported
 
$
10,600

 
$
9,789

 
 
 
$
42,207

 
$
40,180

 
 
Pre-tax margin excluding special items
 
7.0
%
 
7.9
%
 
 
 
9.1
%
 
12.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Net Income Excluding Special Items
 
 
 
 
 
 
 
 
 
 
 
 
Net income as reported
 
$
258

 
$
289

 
 
 
$
1,919

 
$
2,676

 
 
Special items:
 
 
 
 
 
 
 
 
 
 
 
 
Total pre-tax special items (1) (2) (3)
 
314

 
273

 
 
 
756

 
772

 
 
Income tax special items (5)
 
(7
)
 
—

 
 
 
(7
)
 
—

 
 
Net tax effect of special items
 
(110
)
 
(87
)
 
 
 
(269
)
 
(275
)
 
 
Net income excluding special items
 
$
455

 
$
475

 
-4%
 
$
2,399

 
$
3,173

 
-24%


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 11


Reconciliation of Basic and Diluted Earnings Per Share Excluding Special Items
 
3 Months Ended
December 31,
 
12 Months Ended
December 31,
2017
 
2016
 
2017
 
2016
 
 
(in millions, except per share amounts)
 
(in millions, except per share amounts)
Net income excluding special items
 
$
455

 
$
475

 
$
2,399

 
$
3,173

Shares used for computation (in thousands):
 
 
 
 
 
 
 
 
Basic
 
477,165

 
514,571

 
489,164

 
552,308

Diluted
 
479,382

 
518,358

 
491,692

 
556,099

Earnings per share excluding special items:
 
 
 
 
 
 
 
 
Basic
 
$
0.95

 
$
0.92

 
$
4.90

 
$
5.75

Diluted
 
$
0.95

 
$
0.92

 
$
4.88

 
$
5.71

 
 
 
 
 
 
 
 
 
Reconciliation of Operating Income Excluding Special Items
 
 
 
 
 
 
 
 
Operating income as reported
 
$
690

 
$
767

 
$
4,058

 
$
5,284

Special items:
 
 
 
 
 
 
 
 
Special items, net (1)
 
280

 
259

 
712

 
709

Regional operating special items, net (2)
 
23

 
2

 
22

 
14

Operating income excluding special items
 
$
993

 
$
1,028

 
$
4,792

 
$
6,007


Reconciliation of Operating Cost per ASM Excluding Special Items and Fuel - Mainline only
 
3 Months Ended
December 31,
 
12 Months Ended
December 31,
2017
 
2016
 
2017
 
2016
 
 
(in millions)
 
(in millions)
Total operating expenses as reported
 
$
9,910

 
$
9,022

 
$
38,149

 
$
34,896

Less regional expenses as reported:
 
 
 
 
 
 
 
 
Fuel
 
(383
)
 
(308
)
 
(1,382
)
 
(1,109
)
Other
 
(1,315
)
 
(1,247
)
 
(5,164
)
 
(4,935
)
Total mainline operating expenses as reported
 
8,212

 
7,467

 
31,603

 
28,852

Special items, net (1)
 
(280
)
 
(259
)
 
(712
)
 
(709
)
Mainline operating expenses, excluding special items
 
7,932

 
7,208

 
30,891

 
28,143

Aircraft fuel and related taxes
 
(1,646
)
 
(1,335
)
 
(6,128
)
 
(5,071
)
Mainline operating expenses, excluding special items and fuel
 
$
6,286

 
$
5,873

 
$
24,763

 
$
23,072

 
 
(in cents)
 
(in cents)
Mainline operating expenses per ASM as reported
 
13.89

 
12.93

 
12.96

 
11.94

Special items, net per ASM (1)
 
(0.47
)
 
(0.45
)
 
(0.29
)
 
(0.29
)
Mainline operating expenses per ASM, excluding special items
 
13.41

 
12.48

 
12.67

 
11.64

Aircraft fuel and related taxes per ASM
 
(2.78
)
 
(2.31
)
 
(2.51
)
 
(2.10
)
Mainline operating expenses per ASM, excluding special items and fuel
 
10.63

 
10.17

 
10.16

 
9.54

Note: Amounts may not recalculate due to rounding.


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 12


Reconciliation of Operating Cost per ASM Excluding Special Items and Fuel - Regional only
 
3 Months Ended
December 31,
 
12 Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
 
 
(in millions)
 
(in millions)
Total regional operating expenses as reported
 
$
1,698

 
$
1,555

 
$
6,546

 
$
6,044

Regional operating special items, net (2)
 
(23
)
 
(2
)
 
(22
)
 
(14
)
Regional operating expenses, excluding special items
 
1,675

 
1,553

 
6,524

 
6,030

Aircraft fuel and related taxes
 
(383
)
 
(308
)
 
(1,382
)
 
(1,109
)
Regional operating expenses, excluding special items and fuel
 
$
1,292

 
$
1,245

 
$
5,142

 
$
4,921

 
 
(in cents)
 
(in cents)
Regional operating expenses per ASM as reported
 
20.67

 
19.60

 
20.03

 
19.08

Regional operating special items, net per ASM (2)
 
(0.28
)
 
(0.02
)
 
(0.07
)
 
(0.05
)
Regional operating expenses per ASM, excluding special items
 
20.38

 
19.58

 
19.96

 
19.04

Aircraft fuel and related taxes per ASM
 
(4.66
)
 
(3.88
)
 
(4.23
)
 
(3.50
)
Regional operating expenses per ASM, excluding special items and fuel
 
15.72

 
15.70

 
15.73

 
15.53

Note: Amounts may not recalculate due to rounding.
Reconciliation of Operating Cost per ASM Excluding Special Items and Fuel - Total Mainline and Regional
 
3 Months Ended
December 31,
 
12 Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
 
 
(in millions)
 
(in millions)
Total operating expenses as reported
 
$
9,910

 
$
9,022

 
$
38,149

 
$
34,896

Special items:
 
 
 
 
 
 
 
 
Special items, net (1)
 
(280
)
 
(259
)
 
(712
)
 
(709
)
Regional operating special items, net (2)
 
(23
)
 
(2
)
 
(22
)
 
(14
)
Total operating expenses, excluding special items
 
9,607

 
8,761

 
37,415

 
34,173

Fuel:
 
 
 
 
 
 
 
 
Aircraft fuel and related taxes - mainline
 
(1,646
)
 
(1,335
)
 
(6,128
)
 
(5,071
)
Aircraft fuel and related taxes - regional
 
(383
)
 
(308
)
 
(1,382
)
 
(1,109
)
Total operating expenses, excluding special items and fuel
 
$
7,578

 
$
7,118

 
$
29,905

 
$
27,993

 
 
(in cents)
 
(in cents)
Total operating expenses per ASM as reported
 
14.71

 
13.74

 
13.80

 
12.76

Special items per ASM:
 
 
 
 
 
 
 
 
Special items, net (1)
 
(0.42
)
 
(0.39
)
 
(0.26
)
 
(0.26
)
Regional operating special items, net (2)
 
(0.03
)
 
—

 
(0.01
)
 
(0.01
)
Total operating expenses per ASM, excluding special items
 
14.26

 
13.34

 
13.53

 
12.50

Fuel per ASM:
 
 
 
 
 
 
 
 
Aircraft fuel and related taxes - mainline
 
(2.44
)
 
(2.03
)
 
(2.22
)
 
(1.85
)
Aircraft fuel and related taxes - regional
 
(0.57
)
 
(0.47
)
 
(0.50
)
 
(0.41
)
Total operating expenses per ASM, excluding special items and fuel
 
11.25

 
10.84

 
10.82

 
10.24

Note: Amounts may not recalculate due to rounding.
FOOTNOTES: 
(1)
The 2017 fourth quarter mainline operating special items totaled a net charge of $280 million, which principally included a $123 million charge for the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of recent tax reform, $81 million of merger integration expenses, $58 million of fleet restructuring expenses and a $20 million net charge resulting from fair value adjustments to bankruptcy obligations. The 2017 twelve-month period mainline operating special items totaled a net charge of $712 million, which principally included $273 million of merger integration expenses, $232 million of fleet restructuring expenses, a $123 million charge for the $1,000 tax reform employee bonus mentioned above, $46 million for labor contract expenses primarily due to one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments effective in the second quarter of 2017 and a $27 million net charge resulting from fair value adjustments to bankruptcy obligations.
The 2016 fourth quarter mainline operating special items totaled a net charge of $259 million, which principally included $119 million of merger integration expenses, $104 million of fleet restructuring expenses and a $47 million net charge resulting from fair value adjustments to bankruptcy obligations. The 2016 twelve-month period mainline operating special items totaled a net charge of $709 million, which principally included $514 million of merger integration expenses, $177 million of fleet restructuring expenses and a $25 million net charge resulting from fair value adjustments to bankruptcy obligations.
Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training. Additionally, the 2016 periods also included merger integration expenses related to alignment of labor union contracts, re-branded uniforms, relocation and severance. Fleet restructuring expenses driven by the merger principally included the acceleration of aircraft depreciation and impairments for aircraft grounded or expected to be grounded earlier than planned.
(2) The 2017 fourth quarter and twelve-month period regional operating special items principally related to the $1,000 cash bonus and associated payroll taxes granted to employees of the Company’s regional subsidiaries as of December 31, 2017 in recognition of recent tax reform. In 2016, regional operating special items principally related to merger integration expenses.
(3) Nonoperating special charges in the 2017 and 2016 fourth quarter and twelve-month periods primarily consisted of costs associated with debt refinancings and extinguishments.
(4) Refer to Form 8-K filed on January 29, 2016 for further discussion of net special items for the twelve month periods ended December 31, 2015 and 2014.
(5) In the fourth quarter and twelve-month 2017 periods, income tax special items included a $7 million non-cash benefit to income tax expense to reflect the impact of lower corporate income tax rates on the Company’s deferred tax assets and liabilities resulting from tax reform.


American Airlines Group Reports Fourth-Quarter and Full Year 2017 Profit
January 25, 2018
Page 13


American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions) 
 
 
December 31, 2017
 
December 31, 2016
 
 
(unaudited)
 
 

Assets
 
 
 
 
Current assets
 
 
 
 
Cash
 
$
295

 
$
322

Short-term investments
 
4,771

 
6,037

Restricted cash and short-term investments
 
318

 
638

Accounts receivable, net
 
1,752

 
1,594

Aircraft fuel, spare parts and supplies, net
 
1,359

 
1,094

Prepaid expenses and other
 
651

 
639

      Total current assets
 
9,146

 
10,324

Operating property and equipment
 
 
 
 
Flight equipment
 
40,318

 
37,028

Ground property and equipment
 
8,267

 
7,116

Equipment purchase deposits
 
1,217

 
1,209

      Total property and equipment, at cost
 
49,802

 
45,353

   Less accumulated depreciation and amortization
 
(15,646
)
 
(14,194
)
      Total property and equipment, net
 
34,156

 
31,159

Other assets
 
 
 
 
Goodwill
 
4,091

 
4,091

Intangibles, net
 
2,203

 
2,173

Deferred tax asset
 
427

 
1,498

Other assets
 
1,373

 
2,029

      Total other assets
 
8,094

 
9,791

      Total assets
 
$
51,396

 
$
51,274

 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
Current liabilities
 
 
 
 
Current maturities of long-term debt and capital leases
 
$
2,554

 
$
1,855

Accounts payable
 
1,688

 
1,592

Accrued salaries and wages
 
1,672

 
1,516

Air traffic liability
 
3,978

 
3,912

Loyalty program liability
 
2,791

 
2,789

Other accrued liabilities
 
2,281

 
2,208

      Total current liabilities
 
14,964

 
13,872

Noncurrent liabilities
 
 
 
 
Long-term debt and capital leases, net of current maturities
 
22,511

 
22,489

Pension and postretirement benefits
 
7,497

 
7,842

Other liabilities
 
2,498

 
3,286

      Total noncurrent liabilities
 
32,506

 
33,617

Stockholders' equity
 
 
 
 
Common stock
 
5

 
5

Additional paid-in capital
 
5,714

 
7,223

Accumulated other comprehensive loss
 
(5,154
)
 
(5,083
)
Retained earnings
 
3,361

 
1,640

      Total stockholders' equity
 
3,926

 
3,785

      Total liabilities and stockholders’ equity
 
$
51,396

 
$
51,274